As a news reporter I have covered some of everything since 1988, from my alma mater U.C. Berkeley to the Great Hall of the People in Beijing where I followed Communist officials for the Japanese news agency Kyodo. Stationed in Taipei since 2006, I track Taiwanese companies and local economic trends that resonate offshore. At Reuters through 2010, I looked intensely at the island’s awkward relations with China. More recently, I’ve studied high-tech trends in greater China expanded my overall news coverage to surrounding Asia.

Gains Overtaking Pains In Jakarta

I spoke to Prakriti Sofat at BarclaysBarclays only by phone, but I feel sure she was shaking her head as we discussed Jakarta. Traffic crawls, the city started its metro project only last week, 24 years after the first plan was laid, and government corruption rankings haven’t changed much lately. “The way it impacts Indonesia is that you invest more in countries where things are easier for you,” the investment bank’s Singapore-based senior regional economist said.

The Jakarta rush-hour traffic backs up so badly that migrants make money by standing between cars to guide drivers into faster lanes. Also making the city’s infrastructure look all wet, slum dwellers sometimes die when rain floods their shacks along trash-lined riverbanks. Air pollution hangs over the city as intruding seawater replaces potable groundwater. National leaders have earned their 247 million-population country – the world’s fourth largest – a score of 32 of 100 on the NGO Transparency International’s 2012 Corruption Perceptions Index and 4.53 out of 7 points on the World Economic Forum’s 2013-14 Global Competitiveness survey. Sofat says the time hog of the capital’s traffic and inefficiency of corruption have limited foreign investor exposure to Indonesia.

Jakarta breaks ground on its first metro line Oct. 10, 2013 beside a typical traffic jam (photo by Ralph Jennings)

But were they here, company execs might find the traffic easing after 7 p.m. in time for a $5-$10 taxi ride to Bluegrass, a darkish yet festive expat hangout that pumps lounge music and serves from a 24-meter-long bar. It dominates the lower level of a 48-floor slick black glass office tower, one of many in south Jakarta’s upmarket Kuningan district. Behind the tower, demolition crews are picking apart a slum hovel by hovel to extend shopping and high-rise housing so popular just across the street that expatriates are asked to pay a year’s worth of rent up front. They know the Indonesian capital as Asia’s commodities kingpin, a trading post for the national mining industry that contributes about 4.5% to an $878 billion economy and is on track to liberalize. Save-the-rainforest pressure aside, Indonesia has felled enough native trees to produce an expected record 31 million metric tons of palm oil this year. Financial services have naturally come in behind the commodities people, making the ANZANZ and HSBC office towers in Jakarta as imposing as the local Bank MandiriBank Mandiri Bank and Bank Negara IndonesiaBank Negara Indonesia. Indonesia’s economy grew 6.2% last year and the Asian Development Bank forecasts growth of 5.7% this year. It had outpaced most of Asia by growing in 2009 despite the global financial crisis.

Slums aside, gross national income per capita went from $2,200 in 2000 to $3,563 last year. And despite 8.8% inflation, people with money hate to hang onto it, Jakarta’s 130 shopping malls would suggest. The city’s middle class likes sedans by Honda and Toyota. Foreign automakers commonly produce and sell cars in Indonesia. Multiple Dunkin Donuts greet deplaning passengers at the Jakarta airport, suiting Indonesia’s tastes for coffee and sweets. The donut chain hardly stops at the airport and its American peer Starbucks has taken up positions in many of the malls. Indonesians still use BlackBerrys for communication and as status symbols. Samsung and Sony compete as well for the nation of trend-sensitive, enthusiastic texters and social mediaphiles. The iPad has emerged as the sought-after tablet.

“There are always two sides. Twenty years ago, less traffic but also less people,” says Jakarta native Ade Abdullah, 35, human resources training manager for an Apple dealer. “For IT, this is good, especially for Apple because in Jakarta people follow the trends.” (Mobile devices also answer the what-now question for those stuck in traffic.)

Foreign investors may prefer to stay out of Jakarta but might just show up anyway. Companies that give back to Indonesia’s development are particularly welcome, Sofat with Barclays notes. Jakarta’s governor, Joko Widodo, is credited with pursuing new infrastructure, especially to ease flooding, and bureaucratic reforms. The Jakarta metro line’s first phase, which broke ground Oct. 10, will take five years. “The capital city of Southeast Asia’s largest economy appears to finally have woken up to the reality that reaching its economic growth potential comes about by solving complex problems and making difficult choices,” says Brian Sheley, managing director of Cascade Asia Advisors, a risk assessment and strategic advisory firm focused on Southeast Asia.

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